Credit Markets Improve

Dylan Ratigan hosted CNBC's "Fast Money" show Monday night. He started the show with a discussion of how the credit markets improved again today and how the Dow had only a 500-point range. He pointed out that the three-month Libor traded lower along with the two-year swap spread. Pete Najarian says "volatility dropped 25% from 81% last week to 52%." He told viewers they can still apply the strategy of buying stocks and selling calls.

Karen Finerman said energy equities such as the Oil Service HOLDRs had a huge day to the upside. She pointed out that volatility in the 50s is still higher than it was after 9/11. Tim Seymour said Halliburton reported good numbers, and Transocean had a huge day. Ratigan asked the traders what the catalyst was for the commodity names today. Joe Terranova said it goes back to the broader markets. He says "commercial paper finally saw net inflows last week of $10 billion, and the three-month Libor saw a big drop." He explained that energy was the worst asset class coming into this and might be the leading asset class coming out. Najarian told viewers to look at coal names such as Peabody, Arch Coal, Massey Energy and CONSOL Energy. He says "it looks like the hedge funds that were rolled out of these positions are now panicking back in."

Ratigan asked traders when they think stocks will stop trading on fear and policies measures and go back to trading on fundamental data. Najarian said the market is all about the "global story," and it was working today in the coal, oil and steel sectors. Ratigan mentioned that Oracle announced an additional $8 billion stock buyback program. Finerman says a lot of companies have a ton of cash and said their stocks are on sales not seen in decades.

American Express rose in after-hours trading off of better expectations, but Texas Instruments moved lower after the chip maker disappointed the street. Seymour said he's worried about American Express' debt profile, but the company delivered. Terranova says "the stocks that act favorably are the ones you want to own during this earnings season." He told viewers to watch Pfizer for Tuesday. Najarian warned viewers not to rush into Texas Instruments. Finerman said she likes American Express. Seymour pointed out that MasterCard and Visa were trading up after-hours off the positive news from American Express.

Ratigan moved the conversation to the drug sector, which was strong today. Terranova said to look at Merck, which reports on Wednesday. Seymour says, "Merck is an interesting play, because they might start buying back stock." Najarian recommended Novartis and Amgen but told investors to wait on Pfizer. Finerman said she owns Merck and Johnson & Johnson.

The crew spoke with Oppenheimer chief market technician Carter Worth on how to trade his market bottom call. Worth says, "I am all in on the long side." He told viewers to look for the most beaten-down names or the most defensive names that have held up in the bear market. Some beaten down names he likes are Chesapeake Energy, Peabody Energy, AK Steel, U.S. Steel and CONSOL Energy. He said another way to play the beaten-up group is to buy leveraged ETFs like the Ultra Basic Materials ProShares or the Ultra Oil & Gas ProShares.

The traders spoke with Zachary Karabell of River Twice Research on whether alternative energy is the next bull market. Karaball said a lot of the names in the space are down 75% to 80% from their 52-week highs. He says "it doesn't matter how much they are down, it matters where they are and where you think they are going." He said the solar sector has viable long-term demand, and he sees value in the space. Najarian said he needs to see a turn in the space before he can get excited. Finerman says "the easy way to play solar is by getting long crude oil." Seymour says you can play the alternative space with the utilities. Terranova told viewers to play the space with Market Vectors Glbl Alter. Energy. To be sure, lower oil prices have made the green drive seem less urgent and the credit crunch has smaller wind companies unable to secure financing but both presidential candidates plan to make alternative energy a major priority the next four years.

The traders spoke with Piper Jaffrey senior research analyst Gene Munster about Apple which is set to report earnings on Tuesday. Munster says "the December quarter for Apple should be fine based on the fact they’ve basically upgraded 70% of their business, but next year is going to be tough." Munster mentioned that he's disappointed Apple didn't drop its new Mac price to below $1000. However, he explained the company is probably selling enough Macs that it didn't need to. Terranova asked Munster if Research In Motion is a buyout target with the stock so low. He said he wouldn't be surprised if something happens, because the smartphone market is going to see a major upgrade cycle over the next few years. Munster has a buy rating on the stock and said he believes Apple will trade up tomorrow. He said he is still a believer in Google also.

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